India Inflation

India: Inflation rises in June, while wholesale prices stabilize

July 15, 2015

Consumer prices in June increased 1.15% over the previous month, which was above May’s 0.75% rise. The monthly result mainly reflected increases in the prices of food and beverages as well as pan, tobacco and intoxicants. In addition, prices for fuel and light as well as for clothing and footwear also rose. Inflation picked up pace in June, rising from May’s 5.0% to 5.4%, which marked an eight-month high. In addition, the result overshot market expectations of 5.1% inflation.

The wholesale price index (WPI) in June rose 0.51% over the previous month, which was below May’s 0.74% increase. June’s result came on the back of a rise in fuel prices and manufactured products, however at a slower pace than in the previous month.

Wholesale prices in June fell 2.4% over the same month last year, which mirrored May’s decrease. As a result, annual average WPI inflation fell from 0.6% in May to zero growth in June.

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 5.4% in FY 2015/2016, which is unchanged from last month’s forecast. In FY 2016/2017, the panel expects consumer price inflation to average 5.6%.Panelists expect wholesale price inflation to average 0.7% in FY 2015/2016, which is down 0.2 percentage points from last month’s forecast. In FY 2016/2017, the panel expects wholesale price inflation to average 4.6%.

Operating conditions in India’s manufacturing sector were less upbeat in January from the previous month, with evidence suggesting that the Goods and Services Tax (GST) remains a risk to business performance as firms face delayed payments.